Is The Virtual Law Firm Model Coming Up Short?

virtual law firm home officeIt sure is cool to talk about the virtual law firm, isn’t it?  Read the magazines and blogs catering to lawyers, wander the floors of the conferences – you can’t miss the bright, shiny new objects.

I’m writing this from my workspace, located on the top floor of a home on a leafy street.  I’ve done three consultations today, fired off a bunch of emails, and had meetings with my staff and partners as we go through our week.

My office is about 30 minutes away by subway, but I won’t be there today.  In fact, there’s a very good chance that I won’t be there more than a few days this month.

When I’m in the office, it’s to meet with clients personally and look folks in the eye.  But actually work there?

Not so much.

I can be home when my family comes home, and I get to be the one who takes my son to school every morning.

I have lunch on my sofa, where I can watch a few minutes of television without interruption.

If there’s a lull in the action, I can take a walk around the neighborhood or grab a cup of coffee.

When my family wanted to take a two week vacation to Florida, I didn’t miss a beat.  I could likely live thousands of miles from my practice without losing traction.

This Is Not A Virtual Law Firm

When you look at what I’ve got going, it’s not a virtual law firm.

According to the ABA, the virtual lawyer has “found dramatic new ways to communicate and collaborate with clients and other lawyers, produce documents, settle disputes, interact with courts, and manage legal knowledge. ELawyering encompasses all the ways in which lawyers can do their work using the Web and associated technologies.”

That’s not me.  I use technology as a tool, much as attorneys before me used fax machines, copies, and typewriters.  But it’s just that – a toolkit.

The ABA Elawyering Task Force tells us that, “[t]o be successful in the coming era, lawyers will need to know how to practice over the Web, manage client relationships in cyberspace, and ethically offer “unbundled” services.”

Bullshit.

Is The Virtual Law Firm A Failure?

It seems as if the lifestyle design folks are starting to get their hooks into the legal profession, touting the virtual law firm as a way to work less, make more, and sit on the beach sipping drinks with umbrellas in them.

At the same time, I hear whispers from virtual lawyers who complain that they’re not making money.  They’ve got these software packages, they read the books, they follow the virtual law firm gurus.  In spite of this, success eludes them.

Clients get forms spitting out of the computer, emails and portals.  Their lawyers are using these “dramatic new ways” rather than focusing on the real need of human contact and personal service.

Some would say it’s a failure of marketing.  Others would say their entire business model makes them somehow less than a “real” lawyer.  I disagree with both points.

When I decided to become an untethered lawyer, I did so because I had an infant at home and didn’t want to be sitting in the office while he grew up.  Not only that, my office had been just a few blocks from Ground Zero on that sunny Tuesday morning in September; I had experienced the difficulties inherent in transacting business in the face of that tragedy.  I’d been toying with being location-independent for some time, so it was just the final push in the right direction.

The Virtual Law Firm’s Missing Ingredient

The personal relationship with my client is the thing I find most fun about being a lawyer.  Becoming a virtual lawyer didn’t fit with me because I didn’t want to sit behind a computer screen all day.  I needed to be in the real world, solving real problems.  I realized early on that the mindset was more important that the technology.

Turns out, clients feel the same way.

Email doesn’t substitute for a phone call.  A phone call isn’t the replacement for a handshake.

Those who offer the virtual law firm are selling something most people don’t want.  People want to be able to make a personal connection with other people, to build trust in a lawyer’s expertise.  They don’t want to be met with a password-encrypted firewall and triple-redundant backup systems.

How To Make It Ready For Prime Time?

There are lots of organizational concerns that go into creating a virtual law firm.  You need staffing, management, marketing and file management solutions.  You need to figure out how to connect with people who are not necessarily in front of you.  In fact, you’ve got to determine when being face-to-face is best for the client.

What you don’t need or want is for a set of tools to function as a solution without more.  A VLO platform may help, but it’s not smart to tout it as a revolutionary application for changing your entire business model.

That’s my take on it.  But I’m curious to hear from you, practitioners working in a virtual law firm environment.  Is it working for you?  And if not, where do you think it’s coming up short?

Image credit:  TranceMist.

Comments

  1. says

    Jay, you make some really great points, which I agree with wholeheartedly—right up to the point where you say that you yourself aren’t operating a VLO. Are you really saying that personal client service and virtual law practice are mutually exclusive?

    From the sounds of things, my office environment(s) are pretty similar to yours. I work from my home office exclusively, and I go to my physical office to meet with clients, get the mail, and make sure it’s still there (usually 2–3 times a week). For one reason or another, I only meet about half of my clients before they engage me; sometimes I don’t meet them at all. Although I’ve never referred to myself as having a VLO, it’s not a statement I would object to. Does the label really make that much difference, or is it client satisfaction that matters most?

    • Jay Fleischman says

      The way the ABA and the proponents of the virtual law firm define the term, neither you nor I operate virtual law offices. We are “home office lawyers” or some such other thing. The whole eLawyering and VLO concept is being sold to new and experienced lawyers as a means of unbundling legal services and being somehow revolutionary. In fact, there is NOTHING revolutionary about a lawyer working from home (or elsewhere) and leveraging the tools at his or her disposal.

      So it’s only partially a matter of semantics. I think many lawyers don’t go the same route you and I have chosen because they think they NEED the VLO platforms and are somehow required to unbundle their services.

  2. says

    Jay, my bankruptcy practice has been set up from the beginning pretty much like your current one, with most of the work done via email and telephone from wherever I am at the time and in-person client meetings in a real office. My sense is that my clients like my “connected” approach for all but the in-person meetings, and I certainly like it, and we both get the benefit of in-person meetings when necessary. I don’t use web-based client-sign-in methods for communication or delivery of documents because I feel that reduces the personal aspect that’s still there with email; I’m not sure I’m right about that, but that’s the way I feel about it now.

    • Jay Fleischman says

      Malcolm, people hire people – not machines. If your clients respond well to your level of service that’s all that counts. Thanks for your insights.

      • says

        “People hire people, not machines?” That’s practically a quote from the TechnoLawyer article we discussed last week. At the time you disagreed with me, but I guess you changed your mind. My point was that lawyers marginalize new technology and ideas by saying what you did. Ironically, that idea is an excuse not to change or work with consultants, who counsel change. Wait, you’re a consultant, right? Ironic.

        • Jay Fleischman says

          Mazy, I still don’t agree with your article for a variety of reasons. As to being a consultant, I help my clients rather than following a scripted approach to practice management and marketing. Every lawyer presents with a different fact pattern, so each one gets a different solution.

  3. says

    I agree. Offline communication is vital to the success of a web-based (or untethered) law practice. When I client registers as a client on my virtual law office, the first communication they get from me is a personal phone call to introduce myself and answer any questions they have.

    The phone call serves a couple of purposes. First, it allows me to learn about the prospective clients’ needs and determine whether those needs can be met in an online environment. And most importantly, it allows me to make a personal connection with them that I could’t make if I simply responded with a note online.

    By taking the communication offline, I have been able to build real relationships with my clients despite the fact I have never met most of them in person. As a result, even after I’ve concluded a matter, I’ve heard back from clients about life events such births, deaths and incapacitated family members, as well as friends and family they refer.

    • Jay Fleischman says

      Rania, that’s a part of the equation that’s so important. This post has already resulted in a very highly-respected VLO advocate calling me sensationalistic, but the reality is that the profession shouldn’t be forced to declare an “either-or” position. Use the technology as a tool, not as a replacement for personal service or full-service (as you and your business model so chooses). Thanks for the comment.

      • says

        Well your title is a bit sensationalistic;-). But I think the point you’re trying to make is that a virtual law practice is not going to succeed simply because it’s a virtual law practice. It’s still essential for attorneys to find ways to connect with clients on a personal level.

        I do agree with the elawyering task force’s statement that “lawyers will need to know how to practice over the Web, manage client relationships in cyberspace, and ethically offer “unbundled” services,” but I think attorneys can leverage technology while still forging personal relationships with their clients.

        • Jay Fleischman says

          Well, we’re in halfway agreement Rania. When you show me how to effectively represent someone in bankruptcy court in an unbundled fashion that properly protects the clients and passes muster with the federal court system then perhaps I’ll change my tune about unbundling for my practice area. I’m not passing judgment on the notion of unbundling, just the issue that it is the de facto future of all law practices.

  4. says

    First of all, love the topic. No one is addressing this right now despite the fact that the down market is requiring lawyers to innovate/evolve in order to survive.

    Having said that, I don’t think the Elawyering task force is off base with their claims. I absolutely believe that lawyers will be required to manage relationships in cyberspace and offer unbundled services in order to be successful in the future. However, I don’t believe that the cyber relationship must or will replace the personal relationship. In order for a “virtual” practice to be successful, it is my belief that many personal relationships must be forged at the outset. The strength of these relationships then determine the success of the firm’s virtual model.

    • Jay Fleischman says

      John, you’re saying that lawyers will be required to unbundle in order to ensure success? I’m curious as to how you’re unbundling your consumer bankruptcy services or your mass tort litigation work. As to the debt settlement and foreclosure workout information you’re promoting on your site – that I understand because I presume you’re representing a client in a single transaction. But transactional work is not unbundled – it’s already a defined service.

      • says

        Jay,

        We might have different views on exactly what it means to “unbundle.” You’re correct that it is near impossible to unbundle a mass tort practice (I don’t try, in for a penny in for one hundred pounds).

        However, I disagree with your assessment that a loan workout is a single transaction. There are a suite of services provided in workout matters, not all of which are appropriate for each client. For example, some clients need a thorough review of their loan documents to understand better what their options are. Others require review, negotiation, drafting etc. Some need a break down of their potential asset exposure in a collection scenario. Unbundling is not about keeping clients at a distance, it’s about serving clients and meeting their needs, whether small or large.

        This is crucial to success because it allows a small firm to take on a larger range of matters for a larger base of clients. With competition fierce, the lawyer has to adapt to the client or someone else will.

        What is your definition of unbundled?

        • Jay Fleischman says

          I agree with your assessment, John. My problem is with unbundled legal services in the context of a litigated matter – a bankruptcy case, a mass tort, personal injury, divorce, criminal defense, etc. You can’t file the bankruptcy case and leave the client at the door of the courthouse. I don’t care about the economic arguments, it’s just plain wrong and giving the consumer short shrift.

          • says

            Agree 100%. It hinges on practice area. Many areas have a clear “point of no return” where a process, once begun, must be followed from start to finish come hell or high water. You can’t take apart a spoon and the toothpaste aint’ going back in the tube. I guess, as with anything, it hinges on the facts.

            Fun to debate though…

  5. says

    Jay, you have hit on something here that I have been saying for a long time. A VLO is not a business model at all; it’s a service platform. But, what most lawyers are totally missing (and the reason they are not making money) is because they are not running a business, they are practicing. From what I can tell, a VLO does not guide lawyers to attract the right clients, price and package their services, or even serve those clients in a revolutionary way — it merely provides a platform for working remotely. That’s great AND the money in a business is made in marketing, sales, and providing extraordinary service. When lawyers begin focusing on learning how to do these things, they will make money and can work from home, on the web or in an office — as they choose. Not sensational at all, just true.

    • Jay Fleischman says

      Alexis, it’s good to have your insights here. Thanks so much for coming by and taking a few minutes to join in.

  6. says

    Jay: I’m shocked at the tone and accusations in your blog, particularly regarding the eLawyering Task Force. My reading of many of the articles/blog posts, etc. regarding use of VLOs almost always include a discussion of how you can integrate using VLO technology into your practice (hybrid)to offer alternatives to those lawyers who do not want to operate exclusively electronically, if you don’t feel comfortable doing so. See my recent post regarding Rania Comb’s practices in operating as a virtual lawyer: http://bit.ly/pZtLGF.

    Considering the fact that the use of technology, offering unbundled services, etc. in a law practice is vitally important to remain competitive with the emergence of the legal services industry, your negativity and narrow views regarding VLOs are both misleading and unproductive. I’m sorry you find it necessary to lead people to the conclusion that proponents of using VLO technology are blowing smoke.

    • Jay Fleischman says

      Oh Donna, you’re missing the point. VLO platforms are being sold to lawyers as a way of unbundling and keeping the client at a distance. Rania is clearly using a VLO in a slightly different manner, and one that moves the needle in the right direction.

      I don’t think lawyers NEED to unbundle to remain competitive. I also don’t think that companies such as LegalZoom are competition for lawyers just as H&R Block doesn’t compete with my CPA. We offer that which LegalZoom does not – experience, a deeper level of knowledge, and a means of empathizing with clients.

      A VLO platform can be a remarkably effective TOOL in the practice of law. Just as a phone is a TOOL. Use it as part of an overall strategy designed to serve clients better, or use something else in furtherance of that strategy. But don’t operate solely by virtue of a web portal and tell me that’s the evolution of client service because you’re smarter than that.

      • says

        Unbundling, yes. Keeping clients at a distance, no. And while operating SOLELY via a VLO, without personal interaction, is a choice that can work for certain types of matters, it is certainly not the ONLY way to use VLO technology. That’s the point. But does the evolution of legal services rely on technology? Absolutely, and a VLO platform offers lawyers a cost-effective way to expand the kinds of legal services they can provide to capture a piece of the latent legal services marketplace that can’t afford traditional legal costs but don’t want to rely on the LegalZooms of the universe. But hey, thanks for the compliment! I think the same of you, which is why I was so taken aback.

        • Jay Fleischman says

          Looks to me as if we’re not so far apart in terms of technology. There is a tendency to jump to the defensive whenever something doesn’t comport neatly with the party line, so I’m glad we cleared that up. But as to the need to unbundle, I don’t see it as a NECESSITY for competitiveness. It’s a different market, with different needs.

  7. Rachel Rodgers says

    Hi Jay,

    I agree that an online-based practice does not have much success without the lawyer having a relationship with most of their clients, just as is required in any practice set up. I use a virtual law office platform for security and convenience but that does not preclude me from also using the phone, email, Skype, Twitter, Facebook, in-person meetings (when my clients and I are in the same city – during my several weeks in NY per year or during a conference we both attend) and any other communication tool to connect with my clients. I think it would be an odd situation where an online-based lawyer isn’t using various methods to connect with clients and provide a great customer experience.

    I also agree that connecting with clients is the best part of the job, and being able to do so from my home office so that I can live in the same place as my husband and stay at home with my child, makes it even better. I disagree that in-person meetings are a requirement in order to make a connection with one’s clients. Maybe its a generational thing (the vast majority of my clients are under 40) but I have developed real friendships with most of my clients, several of whom I have never met. There are occasional clients, though, who just want a simple transaction done quickly and virtually. And I am okay with that when it happens. Its an assumption that every single client wants a relationship with their lawyer. Most probably do but some just want their legal work done right and efficiently.

    In the past my family members and I have hired more than one lawyer with a brick and mortar office and there was absolutely no relationship, rapport or even decent customer service provided. The relationship thing and customer service thing are not limited to online-based practices. Many traditional law offices desperately need to rethink the client experience. And maybe that is the key benefit of the VLO idea: when lawyers are working in a setting and environment that they are comfortable and happy in, maybe they then provide better service. I can’t speak for all, but I know being online-based is definitely working for me.

    Lastly, I don’t believe lifestyle design means living as a beach bum. Lifestyle design is about making a conscious choice to set up your life the way you want it, instead of the way we are funneled to set it up (i.e., go to school, get a job at a corp, buy a house you can’t afford and be stuck at that job forever while you attempt to pay for the house you never wanted). Lawyers tend to be overachievers, most would probably be incredibly bored as beach bums. :)

    • Jay Fleischman says

      Rachel, you had me until you pulled the whole “generational” thing. I’m 41 years old, live online, and owned the Commodore 64 the day it was released (we bought it at J&R, back when the computer department was in the basement). I wasn’t just a BBS kid, I was a D-Dial kid (look it up). I still have my old Hayes 300 baud modem in a closet somewhere. My mom swears you will get her Kindle when she’s in a coffin. Save the generational argument for someone else.

      In-person meetings are NOT a requirement in order to make a connection with one’s clients. My argument was that there’s no difference between a virtual lawyer and a bricks-and-sticks one. It’s an assumption that every single client wants a relationship with their lawyer, and it’s a correct one. People hire people, not machines. When you hire a machine, you pay it Mechanical Turk rates; when you hire a person, you pay for the expertise.

      As to lifestyle design, being a beach bum is exactly what it’s usually considered. Look at any of the lifestyle design froms, from Tim Ferriss on down, and they ALL talk about travel and leisure without speaking to the hard work it takes to operate a business of any sort.

  8. says

    Good for you for setting your business up as a business that supports you/your family/ AND your clients.
    There has been much discussion here about what is virtual vs.what is home-based office law office so no need to say anything more about that. However, for me,i see 2 key takeaways: that the legal industry must innovate/do things differently to adjust to changes in the profession/economy/client wants and expectations. And second, this will never change: a service business is still about people not flat screens, and you are still the product your client is purchasing. The relationship/know-like-trust factor is still paramount. Whether the conversation is on the phone, a computer chat, or over lunch or a glass of wine, it is still up to us as professionals to facilitate and nurture the relationship.

  9. says

    I am glad that you weighed in on this topic. What irks me about the VLO movement is that you rarely read about the challenges or the downside of this practice. Starting a VLO is portrayed as something as easy as a kid setting up a lemonade stand in front of the house (Steph Kimbro’s comprehensive ABA book on Virtual Practice being the notable exception). For those who opt for an unbundled service model, there’s little discussion of how difficult it is to build a full time practice on small fee cases. I’ve done the math many times, but assume an average $400 fee per case, you’d need 16-17 cases per month to gross $80k. Assuming a 50 percent conversion rate, you’ll need to attract 34 inquiries per month – more than one per day. I doubt that you can get that much with just an online presence. Richard Granat is fairly transparent about his costs of a VLO family law firm in Maryland – some of the articles I’ve seen report that he grosses $100k but also spends $30k – $2500/month on advertising. But those aren’t the kinds of numbers that you see in connection with virtual law practices.
    The larger problem that I see with VLO practices is that, to coin a phrase from Justice O’Connor regarding Roe v. Wade, VLOs are on a collision course with themselves. Not to get political, but with Roe, Justice O’Connor predicted that technology would eventually move the point of viability away back towards the beginning of pregnancy and render Roe moot. With VLOs, the same technology that powers the forms and templates and VLO platforms will eventually reduce the costs to a point where the margins on VLO transactions are so low that profit is only possible with enormous economies of scale. Already, LegalZoom offers attorney-assisted VLO type services for bankruptcy and it’s only a matter of time, I think, before they’ll launch VLO services en mass because they generate the volume to turn a profit on it.
    The other problem with VLO customers is that probably at least half are cost conscious (the others seek convenience). Though ad hoc VLOs will probably be able to continue to attract and retain the convenience-motivated customers over the larger shops, those who shop on price will go with the lowest provider. (Oh, also, LZ does offer phone service, so VLOs who want to avoid calls may need to reconsider that approach at some point)
    We live in a time of incredible fluidity in our profession; it has been in flux for at least 10 years. To put all of your cards on a VLO without taking a broader view to where things are headed is not a wise strategy.

  10. says

    A few years ago I tried integrating a VLO service into my practice, providing clients who found me online with a secure password-protected communication system where they could post questions, review documents, etc. I discovered that no one wanted to use it. Most people would find or request my email address and communicate directly with me that way, even when they knew they had the secure system available to them. They seemed to dislike the extra steps involved with logging into a secure communication system. Eventually I dumped the VLO service and just put a contact form on my website where people could send me emails, and actually saw an increase in the number of people contacting me online. Maybe it is not as secure, but it is certainly more user-friendly.

    I do think there is potential in virtual law practice, but mostly for relatively simple transactions where there is little likelihood of error. If a person wants to buy a piece of property and can provide the legal description, preparing a deed online could be very convenient for that person. Similarly, a simple uncontested divorce practice could be operated through a virtual system with relatively few problems (though the attorney better be making sure that it is REALLY a simple divorce and that they aren’t overlooking important relevant issues). However, while I think an attorney can make a living practicing exclusively online, I am skeptical over how good a living the attorney can make if practicing exclusively that way. I think that a VLO can be a good supplement to a lawyer’s income or that it could be a great way to generate some income for a retired lawyer or for a lawyer who only wants to practice part-time, but I think there is an income ceiling there that would be hard to rise above.

    In my current appellate law practice, I rarely meet with clients. I do keep a physical office for when I have to meet with someone in person, but most of the time I can handle the entire transaction by telephone and email. In fact, I do not even live in the state where I practice law. I operate a statewide appellate law practice in Alabama, but live in Atlanta, Georgia and do most of my work from a home office there. This system would not work in all areas of law practice and I could not have done this myself fifteen years ago, but technology has given lawyers wonderful tools for breaking away from the chains that used to keep us tied to our desks.

  11. Arthur blutter says

    Jay

    I have one office in plain view LI and four virtual offices from queens to Suffolk. I use best case and they have virtual types of soft ware. I provide foreclosure defense work, tax work, ssdwork, wills, trusts and estates. Using the telephone , fax, e mail etc, and young lawyers is and will help me along with expensive (really cheap) on line advertising.

    I am trying to follow the thinking of vlo to marginally increase business. It is all great!
    Thanks for your efforts.

  12. says

    Jay, I’d like to add an observation which I think is confusing some of this argument. Unbundled legal services does not necessarily mean VLO. VLO does not mean one is offering unbundled legal services. UBLS can be offered through a traditional office. I featured one on the SPU blog. VLO does not mean loss of human connection. One can have a physical office and ‘speak’ through e-mail/faxes all day long. Home office does not mean VLO, either. VLO is a platform that can be used any which way a lawyer chooses and for any number of services and in the way they feel best creating relationships. I don’t think it is appropriate to discount statistics put forth by Richard Granat. The appropriate way to incorporate is to factor into potential growth opportunities and to keep an eye open as you grow.

    • Jay Fleischman says

      My point exactly, Susan. So many of the people buying into the VLO model do so because they fail to recognize that a VLO is a tool and a platform, NOT a business model. I’m not discounting the statistics that Richard Granat puts forth, nor do I take issue with his business model. In fact, I see a huge market for unbundling – I think, however, that when you combine the notion of unbundling with a VLO platform you’re essentially selling newbie lawyers on the notion that they can “practice law” by setting up a forms program and letting it fly.

      Make a connection with your client. Provide a service of value. Don’t let a computer choose the legal advice you provide. Be prepared to work your tail off to get business and build a profitable venture. That’s all I’m saying, now and forever.

  13. says

    The ABA Task Force report reminds me of an article I read in 1986 in the National Law Journal which predicted the demise of the solo practitioner because a single attorney could not compete against the megafirms since megafirms could throw a whole bunch of bodies at a case and run the solo ragged.

    They completely missed the influence that computers would have on leveling the playing field.

    I would go broke if I didn’t have the technology that allows our office to do the work in an efficient, cost effective manner, but I would also not have any clients if I had to rely on the clients to fill out questionaires either in the office or on line.

    • Jay Fleischman says

      That’s the problem with futurists, isn’t it? They let fear and “shiny object syndrome” cloud their thinking about the human element. Use technology to make it easier for people, not to replace the level of interaction.

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